Advanced Petrochemical Co. witnessed improvement in the second quarter of 2023, due to lower feedstock prices, not the rise in product prices, Chairman Khalifa Al Mulhem told Al-Arabiya TV.
The possible improvement in global economics, a drop in dollar and forecasts for lower interest rates can alleviate the burden on emerging economies, which will in turn drive demand.
Further, the settlement of oil prices between $70 and $80 per barrel, along with forecasts for declines in interest rates, inflation and dollar will together lead to better product prices and demand growth.
The dollar dip will have a positive impact on local currency products, which will revive demand, Al Mulhem added.
The petrochemical sector has suffered for almost one year, due to geopolitical tensions and economic turmoil, which weighed on product prices. Other factors, such as petrochemicals oversupplies from China in the last six months also play a role.
Saudi Arabia is still one of the world’s best producers of petrochemicals, backed by its proximity to energy sources, feedstock and freight prices, as well as the privileges granted by the Ministry of Energy and industrial zones.
A rise in dollar impacts the purchasing power in emerging markets. Further, higher interest rates impact many countries, squeezing demand for petrochemical products.
Elsewhere, Al Mulhem expected an increase in the prices of products and better results by SK Advanced, thanks to its good experience.
Advanced reported a 62% tumble in H1 2023 net profit to SAR 103 million from SAR 274 million in the prior-year period. In Q2 2023, the petrochemical producer’s net profit dropped 46% to SAR 60 million.
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